Despite numbers showing a healthy economy overall, lower-income spenders are showing the strain
Cracks are showing in one of the main pillars keeping the economy out of a recession: resilient spending by U.S. households
NEW YORK — Cracks are showing in one of the main pillars keeping the economy out of a recession: resilient spending by U.S. households.
Consumer goods giants from PepsiCo to Kraft Heinz have described recently how the combination of high inflation and higher interest rates is hurting their lower-income customers.
It’s the culmination of everything getting more expensive amid high inflation, even if it’s not as bad as before, and the drag of higher interest rates because of more expensive credit-card and other payments.
Remarkably resilient spending by U.S. consumers overall has been one of the main reasons the economy has avoided a recession, at least so far. Capitulation at the lower end of the spectrum could be the first crack for the economy.
“The lower income consumer in the U.S. is stretched,” PepsiCo CEO Ramon Laguarta said late last month when reporting better profit than expected, and “is strategizing a lot to make their budgets get to the end of the month. And that’s a consumer that is choosing what to buy, where to buy, and making a lot of choices.”
At Tyson Foods, during a conference call to discuss its better-than-expected results for the latest quarter, one of the first questions asked by a Wall Street analyst was for executives of the company to describe how they see the state of the U.S. consumer.
“As you know, the consumer is under pressure, especially the lower income households,” Chief Growth Officer Melanie Boulden said.
She said the producer of beef, pork, chicken and prepared foods has seen customers shift away from fine dining and toward quick-service restaurants. It’s
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